Home/Global News/ Oil rises to 3-wk high on Middle East tensions, Venezuela concerns

Oil rises to 3-wk high on Middle East tensions, Venezuela concerns

Vernon Walton |Thursday, March 22, 2018

US Crude Oil Field Production data by YCharts

"Spot Brent crude oil prices averaged $3.36 per barrel more than WTI prices in 2017 compared with just $0.40 per barrel more in 2016, providing a price incentive to export USA crude oil into the worldwide market", saidMatt Stanley, a fuel broker at Freight Investor Services global in a note.

Oil prices hit March highs on Tuesday, finding support from concerns over tensions between Iran and Saudi Arabia, and about Venezuela crude production. Analysts had expected an increase of 2.5 million barrels.

May Brent crude gained $1.22, or 1.9%, to $67.27 a barrel on ICE Futures Europe.

Traders also kept a close eye on the Federal Reserve, which raised interest rates for the first time in 2018 and upgraded its outlook for economic growth after the conclusion of a two-day meeting Wednesday afternoon.

April West Texas Intermediate crude rose by $1.20, or 1.9%, to $62.26 a barrel on the New York Mercantile Exchange.

In gasoline, the EIA reported a 1.7-million-barrel inventory decline, on top of the 6.3-million-barrel fall reported for the previous week.

"Iran has not been treating that part of the world or the world itself appropriately".

Trump could withdraw the US from the historic nuclear deal with Iran, and impose sanctions on the country, which then would make it harder for Tehran to export crude and oil products to the global market.

"There's an expectation that (Trump and Prince Mohammed) are going to take a harder line on Iran, and that's bringing prices up", said Phil Flynn, a senior energy analyst at Price Futures Group in Chicago.

The country's February output was down by more than half a million barrels compared with a year ago, according to International Energy Agency data last week. The production rise has capped oil price gains.

The ramped-up production threatens to undermine cuts made by the Organization of the Petroleum Exporting Countries in an effort to draw down a global supply glut.

Rising US oil output isn't just being refined at home either, as WTI's widening discount to Brent makes US crude exports attractive. USA crude oil production C-OUT-T-EIA has risen more than a fifth since mid-2016, to 10.38 million bpd. Brent crude is now above $66.50.

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